International franchise operators, like our Top 100, are constantly searching for the next possible location where their concept will thrive.
Edwards Global Services (EGS) has ranked the franchising potential of a number of countries. The GlobalVue ranking given to each country, as seen below, takes into account several factors important to the health of a franchise venture.
Table 4: GlobalVue Country Rankings (Courtesy of Edwards Global Services)
Ranked near the top of the list are two countries within a region that is seemingly one of the next big areas in franchising development to watch – Latin America.
Last year, we discussed emerging franchise markets such as the region of Eastern Europe and the Asian countries of Indonesia and Vietnam. These areas are still being actively cultivated by franchisors looking to expand their brands, but area development is a constant progression.
For many years businesspeople of all industries have been paying close attention to the Latin American country of Brazil as part of the highly sought after “BRIC” nations (Brazil, Russia, India, China). It now appears time for the country’s neighbors to share similarly in the spotlight of expansion-savvy franchisors.
Franchisors' desire to expand into these countries was on display during last year’s Latin American Trade Mission. Much like the previous trade mission to Indonesia and Vietnam, the trip gave several franchisors the opportunity to meet with several prospective franchise partners in a streamlined and controlled manner. This mission was more intense than the previous year’s mission to Southeast Asia which involved stopping in three countries (Panama, Colombia and Chile) over a six day period versus two countries in 10 days.
Arranged by the publication Franchise Times and the U.S. Commercial Service, the Latin American mission gave over 20 different franchise brands the opportunity to see the cultures of these locations firsthand and meet with prospective franchisees at organized seminars and events.
Lessons learned were plentiful, especially on the legal front. For example, in Columbia franchise agreements don’t have to be registered and, when applicable, the parties to the agreement have their choice on which law will govern the contract (most agreements are under Colombian law).
Other lessons were cultural in nature. For instance, in Panama (and other Latin American countries) the home-based concept of franchising is not yet popular and is met with some resistance. Thus, franchisors who use that particular setup for their concept found themselves adapting their pitches toward franchisees interested in their brand e.g. suggesting a small out-of-home office location.
Overall, the participating franchisors praised the organizers for the way the trade mission was conducted. They especially were impressed with the quality of candidates—a result of organizers taking the time to prescreen prospects before they were seen for interviews.10
Other Franchising Hot Spots
Other areas of interest in international franchising include countries where the middle class is expanding, urban living is on the upswing, and U.S. exports remain or are becoming increasingly welcome. A number of these countries are located in the Middle East and Africa, specifically Jordan, Nigeria, the United Arab Emirates (UAE), Qatar, Pakistan, Jordan, and Egypt.
Coincidentally, the next franchise trade mission in May 2013 will take participants to this area of the world to visit four of these nations mentioned above (UAE, Egypt, Qatar and Jordan).